Any discussion on investment is incomplete without including the hot, trending commodities such as cryptocurrencies and precious metals like gold. Recent markets have been witnessing a very interesting pattern between these two seemingly diverse forms of investment. In this context, our key focus will be on Bitcoin (BTC), arguably the most popular cryptocurrency, and gold.
Surge and Dip in ETF Inflows
Exchange-Traded Funds (ETFs), important marketplaces for Bitcoin and gold trading, have recently unveiled intriguing data. Bitcoin ETFs have seen an inflow of $839 million, while their gold counterparts have faced a loss worth $4.1 billion.
What History Tells Us
Historic trends are suggesting an imminent 8.3% rebound for gold prices. These rebounds have occurred after every significant drop in the last two years, resulting in a bounce-back ranging from 4% to 33%.
Bitcoin’s Upper Hand
Even against this backdrop, Bitcoin appears to be holding firm. It is comfortably sitting above a crucial technical support level, enhancing the chances of the cryptocurrency crossing the $150,000 mark by the end of this year.
The sheen of gold, on the other hand, seems to be waning fast. Only a week after reaching a record high of over $4,381, gold prices have tumbled by over 10.60%, therewith marking their steepest weekly slump since last April.
US-China Trade Agreements and Their Impact
The contrasting trends in gold and Bitcoin prices appear to coincide with the ameliorating trade relations between two of the world’s biggest economies, the US and China. This follows the recent meeting between President Trump and President Xi Jinping where they agreed to reduce fentanyl tariffs from 20% to 10% with immediate effect.
As the risk appetite improves, it might indicate that investors are shifting their focus back to Bitcoin and away from gold. Are these signs of an investment shift in favor of Bitcoin for months to come?
Bitcoin’s Rising Popularity in ETF
Since gold reached its record high on 20th October, the US-listed Bitcoin ETFs received a net inflow of $839 million, as reported by Farside Investors. Concurrently, gold-backed ETFs experienced an outflow of about 1.064 million ounces, which translated to nearly $4.1 billion.
The Future of Bitcoin and Gold
Bitcoin’s strong support near $101,790, as predicted by its technical charts, aligns with the 20-week Exponential Moving Average (EMA) and 1.0 Fibonacci retracement level. This increases the chances of Bitcoin reaching $150,000 by the year-end.
JP Morgan analysts anticipate that the Bitcoin price could soar to $165,000 by 2025 and continue to argue that it remains undervalued when compared to gold. Conversely, gold, despite the ongoing correction, continues to stay strong due to factors like enormous debt and weakening fiat currencies.
Discussion on the Corrective Phase
Discussion around gold’s bull run being a correction phase is circulating. With gold maintaining a strong position above the 50-day EMA, experts like David Bateman argue that the metal’s bull run remains mainly intact despite the ongoing correction.
The Cycle of Market Corrections
Last three decades have seen steep drops in gold prices above 10%, quickly followed by sharp rebounds. This has been the historical trend. If the pattern continues, as Sabu Trades predicts, gold can revisit the $4,200-$4,250 zone by December 2025, retesting record high levels in effect, thus confirming the broader upward gold trend.
Given that these markets continue to hold as per the predictive patterns, David Bateman’s longstanding target of $5,000 for gold in 2026 is likely, provided the $4,200-$4,250 gold peak gets achieved.
Please keep in mind that all investment and trading moves carry some level of risk. It’s advisable to conduct thorough research and weigh your options before making any decision.
